In a recent ruling, the Allahabad High Court held that Section 129(1)(b) of the Goods and Services Tax (GST) Act cannot be invoked when the consignor claims ownership of the goods with a valid tax invoice and E-way bill. The court emphasized that where proper documentation accompanies the goods, the goods cannot be detained or penalized under Section 129(1) (b) of the GST Act
Samira Enterprises, the petitioner is a registered dealer in MS Scrape based in Delhi. Samira Enterprises sold MS Scrape to Himgiri Ispat Pvt. Ltd. in Uttarakhand. e goods were transported with proper documentation, including a tax invoice, E-way bill, and goods receipt (GR).
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
State authorities intercepted the goods on 17.11.2021 in Muzaffarnagar, U.P. Despite providing all documents, the goods were detained, and a tax and penalty were imposed. The petitioner appealed but it was dismissed without considering the matter.
The petitioner appealed before the Allahabad High Court, arguing that all required documents, including the tax invoice, E-way bill, and GR, were in place at the time of interception. The petitioner’s counsel cited clause 6 of notification no. 76/50/2018-GST, which clarifies that if proper documentation accompanies goods, the consignee should be considered the owner.
The counsel relied on previous judgments in the case of Riya Traders vs State of U.P. and others where courts ruled in favor of dealers in similar circumstances.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
On the other hand, the state argued that there were inconsistencies in the petitioner’s submissions, particularly regarding the origin of the goods and their movement between states. The state implied that without interception, the petitioner may have avoided legitimate tax payments.
Justice Rahul Dwivedi observed both side’s arguments and noted that all the necessary documents were indeed in place, and the movement of goods from Ghaziabad to Uttarakhand was sufficiently documented.
The court also noted that the state authorities failed to provide concrete evidence showing any intention to evade taxes or that the goods were purchased from a non-bonafide dealer.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
The court referred to previous rulings and the relevant portion of Circular No. 76/50/2018-GST dated 31.12.2018 that supported the petitioner’s stance that tax penalties under Section 129 (1)(b) of the GST Act should not apply when the consignor claims ownership with proper documentation and
The court observed that the state initiated proceedings under Section 129 (1)(b) instead of Section 129 (1)(a), despite the petitioner being present and responsive. Therefore, the court quashed the impugned orders for tax and penalty imposed on the petitioner. The court directed the authorities to refund any amount deposited by the petitioner within one month.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
